STRSS 61 – How to Start a Corporate Housing Company w/ Tim Touchette

Video Transcript

 

00:00:00

You know, it’s funny, I look back and I’m like, wow, we’re 300 properties. I kind of remember being at 27. I mean, the ebb and flow of our business that I have been tracking is that, you know, on general we will add anywhere from 50 or more properties a year and probably shed 10 to 20 properties a year. So we’re always netting 30 properties.

 

00:00:27

This is episode number six, one of the short term rental success stories podcast. Are you an investor that’s looking to have your home professionally managed, go to cohost it.com for more information, welcome back to short term rental success stories. I’m your host, Julian Sage. This is a show where I talk to hosts about their journeys and starting and growing the short term rental business. My goal is that you’ll be able to walk away with practical information. That’ll help you become a better host and learn how to scale your business. Like any exceptional host. We all strive for five star reviews. So please go on over to iTunes and let us know what you enjoy. Does it really help support the show if you haven’t done so already going over to our Facebook group, the host nation to connect with the community.

 

00:01:07

Hey, what is going on? Host nation? I am super excited to be back again with you this week. So as part of the ongoing theme of what we’ve been talking about on this show is mostly just about pivoting your businesses. So in some of the previous episodes, like one of them, we had Jack Forbes who talked about creating a direct booking site, a way for you to be able to expand and grow your network. We also talked with traverse last week about how he pivoted his business to be able to accommodate mid and long-term stays and also offloading properties. We’ve been having a lot of really good guests coming onto the show and sharing their experiences in different types of aspects of short-term mid-term rentals, being able to pivot your business and being able to pivot when things are needed is part of being an entrepreneur is part of what this business is about.

 

00:01:55

My heart goes out to everybody that has been affected that hasn’t been able to such as many of the hosts in Florida that have been unable to list their properties. I know firsthand that there’s just a lot of fear and there’s a lot of disappointment and it almost feels like, you know, you just wanna give up and not continue moving forward when things start to get difficult. But I wanna remind everybody that there is just so much good in this community. And I hope that if you’ve been following me and this journey of, you know, my own success story as well, that it’s helped to inspire you to keep going. There is light at the end of this tunnel. And it’s just a matter of time. I hope that during this time though, that you’re looking at some of the other options that are out there and also maybe getting inspired to try new and different things, you know, as the cliche goes, as one door closes, another door opens.

 

00:02:43

And with that, if you’re looking at other forms of real estate investing, there’s actually this conference that I’m gonna be speaking at called veterans live. As you may know, I am still an active duty coast guard member. And I was actually picked to be a keynote speaker at this online virtual summit. That is all military people that have experience in different aspects of real estate investing. So even though the conference speakers are all either active duty or military people, this real estate event is open to the public and all proceeds will be going towards veteran charities. And all the speakers are donating their time and money to be able to just help people and support these charities. So this conference we’re gonna be covering everything in real estate investing. So if you’re interested in maybe purchasing real estate, if you’re interested in syndications or multi-families mobile homes, every aspect of real estate investing is gonna be in here and I’m gonna be talking on shortterm rentals.

 

00:03:39

So if you’d like to hear me, or if you’d like to hear any of the other real estate investors that have just so much experience share their knowledge, or if you’d like to help support military charities, this virtual event will be held May 29th. So next Friday ticket prices start at a hundred dollars. But what I’ve decided to do is that if you purchase a ticket through my referral link, again, I’m, I’m not getting any commission or anything off of this, all the proceeds go to charity, but if you decide to purchase a ticket for this event and you send me the receipt, then I will give you access to all of the bonuses in our Airbnb secret revealed book. So part of the bonuses that we have for Airbnb secret revealed, if you decide to get the free ebook, you get to become a lifetime member, which means that you get access to one of our courses, you’ll get constant updates for the course every single week, because every week we put out a new episode and then we update that course, you also get the audiobook version of our newest book, Airbnb secrets revealed.

 

00:04:37

You’ll also get another ebook that we have out called the short Rental success secrets, which is the first 50 interviews that I’ve done on the show. And I’ve taken all of the success secrets and made it into one ebook. So there’s over 500 tips from 50 hosts that I’ve interviewed on this show. And the final bonus that you’ll get is access to a training program that I actually did with Shannon Hyde, from guest ready. That was episode 50, where I interviewed Shannon. Who’s the global operations manager for guest ready, which is the largest property management group in London, and one of the top performing in the whole world. So we did a special two hour training with Shannon included in there. So you get access to all of these bonuses, the total price for that. If you were to just purchase everything, yourself would be $39.

 

00:05:25

So for the a hundred dollars that you’ll be purchasing a ticket, you’ll also get about a $40 bonus. And what we’ve also decided to do is that if you decide to purchase a ticket, you’ll be put into a lottery. So everybody that decides to purchase a ticket to this event, and at the end of the event, we will select one of the people and that person is gonna be getting access to our premium course, the VRM Formula, which sells for $2,000. So it’s a really, really awesome thing. You know, all of this is just to help support military charities. So if you’d like to be able to purchase your ticket, go to Short Term, Sage dot com slash veterans live 2020. And again, once you purchase your ticket, just send me an email at Short Term, Sage gmail.com, letting me know that you purchased it.

 

00:06:12

And I will give you access to all of your bonuses immediately. And you’ll also be put in for the lottery to get access to our premium course, the VRM Formula. But with all that being said, though, I want to introduce Tim Touche. Tim is the president and owner of stay at TACHE, a corporate housing company that has over 290 Rental units in the DC area. When Tim and his wife started in 2001, they placed a $200 text only classified ad in the Washington post. Now back then, it was really challenging to get businesses interested in such a small company, but Tim has been able to grow this company over the past nearly 20 years. And Tim’s also seen a lot of the economic downturns, such as nine 11 and the 2008 recession. And now he is also seeing the COVID 19 pandemic. So Tim has a wealth of experience in this very unique niche being corporate rentals.

 

00:07:09

Now I had no clue what really corporate rentals were and how they operated. And this conversation with Tim opened my eyes to exactly what corporate housing companies do, how they operate. And then we also talk about how some of the other players in the space such as like Saunder and lyric and how they are actually classified as corporate housing and how they kind of fit within that world. This is a really interesting and great episode because Tim talks about what a corporate housing company is, how they’re able to meet the expectations of both property owners and business clients and how their businesses have been affected during this time. And a quick disclaimer, that Tim is not speaking on behalf of the corporate housing industry. A lot of his thoughts and personal opinions are exactly that just his own thoughts and personal opinions. On the matter if you like my show notes for this episode, go to shorttermsage.com slash six one.

 

00:07:59

Or if you like my show notes sent directly to your inbox every week, then go to Short Term Sage dot com slash show notes with all that being said onto this week’s conversation, a welcome back host nation to another episode of short mental success stories. In this episode, we have this special honor of having a pretty unique first time guest for us. We actually have Tim Touche. Tim is the owner president of stay atta. Is that how you pronounce it? That’s right. Yep. Stay at in the DC area. He is, he’s got a corporate housing company where he has over 290 units that are in his portfolio. We’re gonna be breaking down in this episode, talking about, you know, Tim’s journey and starting all the way back in 2001 before nine 11, going through now, this is, you know, three types of crisis and how the corporate housing company and how the corporate housing world is responding and, and how they’re impacted during this pandemic. As we all know, this episode is coming out during the COVID 19 pandemic. So we did wanna get someone on from a different sphere of the short term, you know, world to talk about that. So Tim, thank you so much. And if you wouldn’t mind introducing yourself, letting the host nation know who you are and what inspired you to get into corporate housing.

 

00:09:13

Sure. Well, first of all, thank you for having me on here. It’s, it’s one of the topics that I can talk about for hours, which is just generally real estate and Rental. So I’m excited to on here and this corporate, basically my wife and I bought two investment properties in early basement, a and other wasn’t and basically who sold it to us, said you renting on furnished and you know, back then it was maybe about 50 or a hundred dollars more. And it, I, I liked the idea as something different so that we didn’t have to compete with all the other Rental properties out there. And eventually we furnished the other one up and decided to focus on that. And this was back when it made classified ads and newspaper, and it was to businesses interested, really small really a company, company.

 

01:10:29

So someone basically just said, it’ll be, you know, you can actually make a little bit more money if you list it as a furnished, you know, right now we have the luxury of, you know, lots of people are going online for the internet. You have all these different sites where you can get this. We have, you know, we brought up before talking about like Airbnb and how you utilize that as well. But before you were putting classified ads in the newspaper, how much, how much are you spending to, to try to promote your, your listings?

 

01:10:56

Well, the classified ads were really big on Saturday and Sundays and the majority of them were normal Rental. And then the back of the back of the classifieds, there was another subheading called furniture rentals, where there were one or two listings. And if you went more than two lines, that was about 200, just for that line. You know, for those two lines, if you went three lines, it, this, you know, went up another hundred or more so, and you know, all you were able to do was just basically give a general overview and a phone number. And then we put our website on it too, but I mean, it was paper. And so, you know, you had scrappy and kind of to not afraid to knock on some businesses, doors and set flyers out and kinda, you know, do do it. I, I remember thinking early on, if I’m really gonna focus on this niche, it’s gonna be a lot slower growth than a traditional Rental company, but I felt it would be a lot more rewarding because I, the, the clientele of the renters business travelers just appeal to me and, and someone that I, I enjoyed doing business with.

 

01:12:13

So you, when you first started into real estate, you, you decided that you wanted to pick a niche. You said, okay, I’m just gonna dive into this. And that was your first two properties you listed these classified ads, you know, in the Washington Washington post, you said, and were these individual renters that were contacting you because you said that there was like two portions, there was a side where it was like regular rentals. And then there was the, the furnished rentals. Where was the clientele that was contacting you different? Was it like businesses that was speaking with you directly?

 

01:12:43

They were, well, I will tell you that campaign wasn’t really all that successful being in DC, having a contact at an embassy or two, we got lucky early on just talking to a couple of them, you know, to answer your question. The people from the classifieds were not traditional business travelers. There were more individuals who were either intern or sometimes relocating with small business re helping and easy.

 

01:13:26

So you, you were listening on these classified ads, but then you said that you, you found a couple, a couple people from an embassy that were able to give you business.

 

01:13:36

Yeah. So, you know, the embassies were responsive and, you know, and that helped us out for a couple more years, as we continued to grow and manage other people’s properties. And then, you know, this little website called Craigslist came out and pretty much decimated classified and newspaper industry. And I remember when that first came out, we heard about it because rich, France in San Francisco, and they were just opening it in DC. And we were like, wow, this is great free classifieds. Does anyone know about it yet? And so that really helped us out early on to get the word out without having to spend a lot of money on ineffective classified advertising.

 

01:14:27

One of the things about corporate housing is can you kind of distinguish what the difference is between corporate housing and, you know, for, for our listeners, which are short term rental, short term renters, you know, in our space, you know, we, when we think of like corporate housing, we’re typically trying to go after like traveling nurses, like traveling nurses are kind of like our bread and butter for longer term stays. But for you, you said like you, you spoke with an embassy and they were providing you clients. Is that what a corporate housing company is, is just directs? Or what, what is it exactly?

 

01:14:58

Well, I, I think the easiest way when people ask me what corporate housing is, I usually define it as people who aren’t paying the rent themselves. And so while that could apply to nightly weekly rentals, you know, shorter term, really, we don’t deal with Vacation renters. People are submitting expense reports, and they’re standing for corporate housing association, which I’m a member of, you know, one of the unofficial separations from regular rentals or, or nightly weekly rentals is the 30 day minimum term, however, as an industry, and I can’t speak on behalf of them, but there’s been a lot of discussions about trying to differentiate based on that minimum lease term. And that’s not, that’s not a global definition, but a lot of they, they tend to be longer term stays. You know, our average stay is between three and four months.

 

01:16:01

And where, where do you find these types of people that stay three or four months, cuz for us, when we’re trying to market, you know, we use channels such as like Airbnb VRBO. If we’re trying to find like longer term stays we’ll we might go to like a site like furnished finders, but where, you know, you’ve built up to 290 properties and you’re filling those with, you know, these three to four month long stays. And right now during, you know, this pandemic, a lot of short term rental hosts are like, you know, oh crap. You know, all my business is dead. You know, everybody’s trying to turn to long term Rental. So where do you, where do you even find these types of tenants?

 

01:16:38

The quick answer is it’s, it’s tough because it’s really about a relationship. I mean, if you think about business travelers and they’re reliant on their employee or their new hire that’s relocating and you don’t have a good service reputation or you’re just kind of a one off, they’re gonna be hesitant to work with individuals, visuals. I mean they will. And you know, so I mean, I usually say it’s, you know, we’ve been doing it for so long and you know, a lot of it is referral and word of mouth and just building it out that way. I mean, I, you know, as much as I wanna work with Google and their relocation team, they are so big that they have contracts in place with companies like Oakwood that have corporate housing around the globe for them to work with one provider and one market doesn’t make sense. So we try to target midsize, midsize and smaller companies and companies that are specific to DC, the market that we’re in right now.

 

01:17:48

So when you first did you know what corporate housing was or what it would eventually, you know, lead to because what it, what it sounds like is you reach out to these, you reach out to companies and there’s some companies like Google, where they already have like designated people, designated companies that they work with. So you’re, you know, from what it sounds like a corporate housing company is reaching out to the companies that aren’t as large or maybe don’t already have those pre-established relationships. And you’re trying to have you be there, go to for housing.

 

01:18:19

Yeah. I it’s way also describe housing is it’s a niche. So if you think about hotel stays or nightly rentals, almost anyone can stay in a hotel for a night or two almost anywhere in the world, you know, and then converse, if you go unfurnished, yearlong rentals, most people are familiar with renting for yearly terms. Either they own a property or they were renter or they are renting two huge buckets between there are fewer out there for let alone three or four months to a place. Think think I know, you about, about myself, like I wouldn’t be able to do that and not many of my friends would, especially kids at home. You know, you need to be consultant. And even a lot of will only, you know, do three or four nights out and it’s small group. And I, I find it interesting that a lot of the, you know, Airbnb and other providers are saying, Hey, this is a, a new group. And I agree it’s not their typical Rental renters, but you’re also pulling from a much, much smaller pool of potential potential clients. And I mean, I knew that going on or early on where it’s like, it’s not gonna be this company that grows, you know, exponentially because there’s this worldwide need for furnished monthly rentals. It’s just, it’s a nice niche to have. And my approach has been, you know, let’s try to be the best at it at what we do and, and have fun along the way.

 

02:20:06

So, so what was the turning point for your, your business? You had these two units when you first started, you were listening to them on the classifieds. Was it the embassy, was that it was like, this is a legit, this is a real business now where we have a reoccurring client or was it something else?

 

02:20:22

I would probably say it was, Craig’s just getting a mass following just because we could then more easily target a better variety of clients instead of paying a lot of money for that. It was all free now. And you could include photos and, you know, unfortunately Craigslist, you know, suffers from what the eBay phenomena of trust and reliability, you know, once it becomes kind of free or easy to put something on there, a lot of bad actors kind of follow suit. So, but I would say that was the big catalyst. And then, you know, from there, we were able to kind of get in with more companies and get more regular business that way.

 

02:21:15

So businesses were actually going onto Craigslist, looking at the furnish rentals and contacting you because before they could only use things like the classified ads.

 

02:21:24

Yeah. Or they, I mean, or they didn’t even know where to find them, or they would be stuck at a, an extended stay hotel outside of the city. You know, their options were really limited in terms of even providing that. And, you know, we tried to say, you know, we do corporate housing, unique corporate housing where we have no two properties are alike. So if you a basement, a rowhouse, you wanna be in different parts of the city, we have these options for you. I also, you know, what’s slightly different about, I mean, within corporate housing, the majority of providers are our demand side. Meaning they have sales people out there calling companies saying, do you have a need? And they’ll say, yeah, I need a two bedroom in November for three months at this price point. What do you have? And then they’ll go out, talk to apartment communities, try to get a rate, talk to furniture, Rental companies, try to get a rate. And then, you know, so they, that’s the demand side of the business. We take a supply side, here’s our inventory. We hope it fits your needs. You know, here’s a great variety. And it’s again, another variation on a niche industry of corporate housing.

 

02:22:45

You know, that, that’s one of the things that, you know, like I, I look at corporate housing and I’m just like, you know, I’m kind of shocked, like what you’re able to do. Like, you know, what you’ve been able to grow to because like you said, you have that supply and demand for short term rental hosts. You know, we get all of our, you know, demand through these online travel agencies like Airbnb, VRBO, HomeAway, but where you’re getting your demand is directly from a company and then you need to get the supply. So growing that, so during this time when Craigslist, you were able to start advertising, all these companies started going onto there finding your units. Did you just start, how, how did that grow from there? Did you just start finding people that had properties and you would lease them out and then furnish them, or what’s, what does that relationship work with? The owners and the supply?

 

02:23:36

Yeah. I mean, reaching out to owners has always been another aspect of it. Whereas, you know, you have to educate them on, you know, it needs to be furnished. What does that utilities included is that if you, what if the, a property, it wasn’t an easy sell, but we primarily started with a lot of property owners who were looking for flexibility in renting their place out. They may be heading outta town for an undetermined amount of time and they didn’t know if they were putting their stuff in storage or not. And so we kind of just targeted them. And then also it’s like most real estate it’s location, if they have a great place that everything lined up, but it was just a little outside of the business center of town. It wouldn’t rent and, you know, sometimes we’d try and sometimes we’d get lucky and sometimes it wouldn’t. So it’s just a, of trial and error. And you know, the, of the day we always say, vacancy is common occupancy. Renters is kinds to most owners, you know, we try to keep our occupancy rate around 90%.

 

02:25:06

Are you leasing because in the shorter Rental space, I don’t know if you’re familiar with this thing called Rental arbitrage or the master lease model. Is that something you’re familiar with?

 

02:25:15

Yeah. Doing my research. I, I just about it, but I’m familiar with the concept. It’s what a lot of corporate housing companies have done in the past with big apartment communities. It’s in, in, in our, in our industry, it’s called master

 

02:25:32

Leasing, master leasing. Okay. So, so the, so with the master lease model, are you essentially master leasing from owners or are the owners taking a profit or how, how does that relationship work with your supply?

 

02:25:47

So our model is based on a traditional property management model. So what that means is we don’t let owners, self-manage a property and we do that for consistency of service across, you know, I always say one of our biggest challenges is consistent guest experience across all three properties when properties are so one way we handle that is just making sure we are the service side of, you know, the inspections, the repairs maintenance request, the arrivals, departures, the cleaning coordination, all that is handled through us. And the other question I, I got off topic there. What was the other question?

 

02:26:33

I forgot. No, that, that, that was right. I was, I was just asking about with your owners, are they like personally, like if you don’t find a client to stay in their property, are they not able to cover their mortgage payments? Or is that something that you guys cover? Just, just trying to clarify on that.

 

02:26:50

Oh, I see. Yeah. We, we don’t, we don’t guarantee that,

 

02:26:53

But, but if you are not able to supply someone in their property, then they’re not able to receive the, the money for their payment. That’s

 

02:27:02

Correct. Yeah. So we just take a percentage of the rent when it’s rented. So like I said, occupancy is the common enemy. So if, if a property doesn’t get rented, the owner doesn’t get paid and we don’t get paid. So we do everything in our power to up strategic properties that we think can rent, well, add a number the owners are happy with and we share in the risk.

 

02:27:23

I mean, that, that, that’s, that’s gotta be, that’s gotta be kinda like scary for an owner, you know, having to, because they could, they could do a traditional Rental or traditional property management company. Right? Yeah. So what, what’s the difference from working with a traditional property management where that maybe they’re a little bit more guaranteed, like they, they’re always gonna have someone that’s in there long term versus working with a corporate housing company where, you know, if you’re not able to supply, then they’re not able to cover their, their payment.

 

02:27:49

Correct. I mean, you know, one of the first questions we ask property owners is, you know, Hey, what are you? What’s your agenda? What are you hoping to accomplish? And if they want more security, we encourage them to go unfurnished for a year. If they want higher risk, they sometimes have the option to do nightly or weekly Rental. And then, you know, we’re somewhere in between. So we do is we roll out kind of what the market rates are. We try to set realistic expectations and based on their needs and agenda, you know, sometimes we’re a fit frequently. We’re not. So that’s why, you know, this niche is, is what it is. You know, when we talk to people, sometimes they care more about higher quality renters than getting the highest amount rent possible. Sometimes they carry more about flexibility, you know? So the, those are, you know, sometimes we have people who have like really big houses and they don’t want it to become a group house. And so, you know, I mean, while we can’t technically prevent that we do have fewer requests for large houses and, you know, so that, that makes our option appealing.

 

02:29:18

So when you’re trying to pitch a, a property owner and, you know, tell them about the idea of corporate housing is what’s, you know, you’re, you’re giving them this, this unique value proposition that they could find a better quality tenant, but are you also doing things like, are they because of the risk that maybe they’re taking on trusting you, are you offering them a higher Rental payment or is it just the standard Rental rate? And this is just the bone, the, the benefits that you get, if you, if they do decide to work with you.

 

02:29:48

Yeah. I usually like saying, I wish we were always the highest and best use of real estate. And as a niche, we’re not, there are certain factors that will determine, you know, if we can get a premium over a normal unfurnished, yearlong, Rental factories, and sometimes we’re not, sometimes people will say, oh, that’s all I can get. Well, I can get that Yeah. unfurnished. Unfurnished. And I would say, then do that. But like I said, sometimes there are other factors, the convenience, the flexibility they want better, they want better terms. And so that’s why they choose to go with us.

 

03:30:38

So you, you have, you have a owner that’s willing to work with you and now you have this new property, but now you go back to the demand, you have to have the people that are gonna fill the property. Are you going back to the same people that you previously were working with and asking them for more, if they need more housing or do you have to find new people? Like how does that balance work between that supply and demand as you, as you’re growing?

 

03:31:05

Yeah. I mean, we will highlight new properties that we get, we’ll talk to our existing clients and say, Hey, here’s a new property or two, you know, or you stayed with us last year. And the property you stayed in is now rented, or it’s not available during your dates, but here’s one that’s similar in location or style or size or features and, you know, offer it to them that way.

 

03:31:33

You know, during this time when Craigslist was, was allowing you to grow your business, you, you were, you were scaling. What, what did that, did that look like? Were you, were you just saying, you know, now’s the time to really scale this up and is that when the majority came or when was kind of like the next pivotal moment after Craigslist for your, for your business?

 

03:31:52

I don’t know. You know, it’s funny I look back and I’m like, wow, we’re 300 properties. I, I kind of remember being at 27. I, it, there wasn’t, I mean, the ebb and flow of our business that I have been tracking is that, you know, on general we will add anywhere from 50 or more properties a year and probably shed 10 to 20 properties a year. So we’re always netting, at least in the last couple of years, we’ve been netting around 30 properties. And, you know, I mean, it’s, it’s kind of part of the, the deal where we have some owners who will say, Hey, I wanna rent it. And then I need to wait for a year or so, and then I’m gonna sell it. And so having our option is a great option for them to do that. So we know going in that we’re getting a handful of properties that we may not have more than a year.

 

03:32:53

And then other times people take jobs overseas and then it didn’t work out. And so they’re like, I gotta move back in. And so then we work with you giving their property back and other properties, you know, is their market changes and conditions and you vacancy is greater than they expected. And so do something, say, I go, if we aren’t able to do what we say, we’re gonna do. We wouldn’t be growing every year. And, and we pretty much have been, I’ll tell you the last year or two has been tough, but, you know, in general, we’re still adding properties and keeping places rented.

 

03:33:34

So a as you’re adding these properties, are you also focused on finding new clientele, like finding new businesses that need a constant flow of cor furnished housing? Like how does that work?

 

03:33:48

Yeah, I, I would say the majority of our marketing efforts are always about developing and fostering relationships with the business clients we have and finding new ones, you know, to a lesser degree, it’s finding property owners. Because as I said before, a lot of property owners, it may not make sense to them. So for us to go out and try to convince them that this is what they need to do with their property, doesn’t always resonate. And so really we’re always focused on keeping the inventory. We have occupied as close to as possible.

 

03:34:25

You keep occupancy for your properties around a hundred percent. You said,

 

03:34:30

I mean, so in certain neighborhoods we average around 90 to 92% occupied, and then, you know, citywide, it’s probably around 85.

 

03:34:40

Wow. And see that, that’s the crazy thing to me too, though, is that because you have these clients that are staying for like three or four months, I, you know, if someone takes a block of your calendar and now you have maybe like this wedge where it’s maybe, you know, inconvenient for most now you have to find a client from one of the businesses that you work with to BA basically pair them with that little gap in your calendar.

 

03:35:03

Yep.

 

03:35:04

And, and you you’ve been able to stay around 90, 80% occupied in your units with, with that.

 

03:35:10

Yeah. And I mean, keep in mind, our price points are lower than, you know, in, and this is a broad generalization, but the way I describe it is we are gonna be 30 to 40%, more expensive than unfurnished year, long leases, but there’s flexible terms, utilities are included and there’s furniture involved. And then we’re gonna be 30 to 40%, less expensive than nightly and weekly Rental Rental. And so, you know, when I talk to owners on both sides, they’re like, you know, if you have a, a three, four bedroom house that you’re doing night Rental for in the season, you know, people are 4, 5, 6 a, and we can’t come to that. You know, so we know that going in and if people wanna do that and they’re okay with, you know, the quasi legality of, of it, you know, we don’t, we’re not here to convince you otherwise, cause the numbers just don’t always work out.

 

03:36:14

So, so you said you spent the majority of your marketing efforts on fostering those relationships with businesses. What, what does that relationship building look like and what does your marketing yeah. What does your marketing efforts look like when you’re trying to create a relationship with a business to provide you these, these clients?

 

03:36:35

Well, I mean, it’s, it’s basically, you know, our efforts are like, Hey, you know, we have roughly 300 properties in this part of town and we have, you know, this variety and, you know, visit our website and, you know, hopefully, you know, we’d be happy to you and discuss, you know, how we can help, you know, we’ll, we’ll complicated. That’s also not knowing, of kind knows everyone’s your customer, not everyone’s gonna want what you have and, and still kind of, you know, pushing on and finding the folks that, that do resonate with what you’re offering.

 

03:37:23

Well, that that’s, that’s gonna be my next question is, is that, how do you know who’s the, who’s the right person, cuz there’s plenty of businesses out there, but how do you know which businesses are the ones that can fill your units?

 

03:37:35

They’re either the ones who respond or, you know, we, we ask are, is this what you’re for? So I it’s, you know, sometimes it’s surprising because you don’t think bigger company would have a need for this. And then, you know, there may be their current provider can’t supply something. I mean, I’ll give you an example, larger companies that use national or global corporate housing, corporate Friday housings don’t always have houses in their inventory like freestanding houses. Cause they usually like the model of large apartment buildings. And so if they have a client that has a need for a rowhouse or freestanding house, we work with them and kind of just say, Hey, give us a shot when those requests come in. So, you know, it’s just kind of understanding our, our value position and talking to the people who have a need that they don’t, who have a need, that they don’t currently have an inventory,

 

03:38:46

But for, for like even finding these businesses, cuz like there’s, there’s sites out there like corporate housing by owner. And I think that’s just what it’s just like a listing site and you know, companies like, you know, like even, even my properties, like I could list my properties on corporate housing by owner. You probably use that to market, I imagine. Or you stay away from sites like those

 

03:39:06

Used contact for their properties in areas that we don’t service. I mean, for example, like Tyson’s corner, which gets a lot of business travelers, but for us to manage it effectively, we’d be stuck in traffic. We’d almost have to open an office out there to do that. So we would, we, we send them to corporate housing by owner as an option

 

03:39:33

And that’s like individual companies or individual people that contact you asking for, for a unit. You’ll just send them to a site like that.

 

03:39:42

No, sorry for property owners, property, contact us. Got it. And they say, Hey, can you help bring corporate renters to the property that I own? And if it’s not in our area, I’ll direct them to listed on corporate housing by owner.com.

 

04:40:00

Got it. But for like how you’re even finding these, these businesses, are you, is there like a list of businesses that like you you’re getting from somewhere from somewhere else? Like, like you said, the, the national corporate housing association or is this like you’re going out on the internet and just finding businesses that are there and seeing if they need need rentals in your, your area?

 

04:40:27

I mean, our, our approach is kind of all the above. I mean, as a member of corporate housing association, you know, they have webinars and annual conferences that they go to every year and you know, and it’s just talking with other providers and finding out, you know, that’s when I, I get to spend the most of my time talking to large corporate housing providers and just kind of, I’m always there saying you have that, you know, needs the house we’ve and just kind of giving, you know, getting access to them at that opportunity. I, I would say that’d be hard to do just on a phone call randomly. So like at the networking events, those are, those are great conversations.

 

04:41:15

So within the corporate housing world, you guys work with other companies and if they other

 

04:41:20

Corporate housing companies. Absolutely.

 

04:41:22

And if they’re not able to service, like if one of their clients says, oh, we need properties in the DC area, they’ll refer you business and yep. And, and you get like, is that like a commission or a split? Like how does that work?

 

04:41:34

You know, it’s, it varies sometimes it’s you pay referral fee sometimes they’ll mark it up a little bit other times, they’ll just say, Hey, this is a really valuable client, you know, treat ’em well, and there there’s no money involved, you know, and it’s a good community because it’s, it’s a, I mean, it’s a niche again. Say that again, but it’s but S Vacation Rental, you know, it’s, it’s, it has a community feel. It’s kinda weird.

 

04:42:16

So, so let’s say for the people that are interested in starting a corporate housing company, you, you said, you know, there there’s people that they’ll, they’ll try to reach out to Google and say, Hey, you know, are you looking for corporate housing, but they already have a provider. So for a new person that’s coming in, how do they even know like where to start or like how to even grow a business if everybody else is already, has those established relationships?

 

04:42:42

I mean, I would say if you just have one or two, you’re probably just better off going on the internet. I mean, reaching out to businesses, you really have to have something that would be appealing to them. And you probably want a decent number of units that you can fulfill their needs for. So I mean, to people who have been doing short term rentals and because of the coronavirus have a lot of vacancy, I, you know, you could say, Hey, you know, target go online and try to find a bunch of different businesses. But I mean, you know, even traditional businesses that are, do business travel have travel shut down right now. So that’s why everyone’s talking about nurses and doctors. And I mean, that’s a smart thing to do because in this restricted age, you know, that’s kind of really the only people out there that are traveling and are looking for temporary accommodations,

 

04:43:48

You know, going, going off of that, how, how has the corporate housing world been affected by this pandemic? I mean, you’ve been through, you know, three, you know, major economic downturns, you know, nine 11, 2008. And now with the Corona, I’m sure that you could probably find some others in between there, but you’ve, you’ve, you’ve seen the gambit. How, how are corporate housing companies affected during these types of events

 

04:44:16

From what I’ve been to gather? I mean, for, you know, we’re in DC. So I know DC pretty well. Corporate housing providers in other markets have had some significant losses in terms of clients canceling DC has been pretty good because of the number of hospitals here. And, and some government travel is still taking place. I had my CFO pull numbers of first quarter 2019, first quarter 2020, which obviously, and we were down about seven. So it’s not terrible. We should, you know, I mean, everyone has higher projections, no one projects projects that go lower, but our cancellations have been minimal to. Whereas I have a, I have a friend of mine who has a 10 unit building in DuPont circle and zoned to do nightly. And he, he, you know, he was at, you know, for the first two weeks when this came out, he was like, I’m at a hundred percent vacancy. You know, he had, everyone was canceling on him. And, and, you know, fortunately we haven’t seen that extreme level of cancellations. And, but, you know, I would say it’s, that’s DC. There are companies in other markets that are, again, I would say in general, they’re faring better than nightly weekly rentals because Vacation travel has been really put, you know, on hold. And so if that’s who you’re targeting, it’s gonna tough.

 

04:46:16

What, what has been the most challenging part of, of scaling this business, this corporate housing business,

 

04:46:24

It’s creating a consistent guest experience across all the, you know, no two properties are like, where, you know, we’ve got a studio basement apartment and we’ve got a four bedroom rowhouse in Georgetown and, you know, coffee makers and supplies and everything is different. And so, you know, managing expectations, getting the experience down well and, and just being really good about customer service. It’s just being out in front of everything, predicting and, you know, getting good processes in place. I mean, our it’s funny once we hit a certain level where we had one person handling all reservations and that got beat too much for her even splitting that role into two people became a challenge because, you know, communication breaks off. If you’re talking to one person and you’re talking to another, and then it’s like, where do we track that it used to be in someone’s inbox. And now you had to have a, another program to share what was said. And, and then, you know, someone goes on Vacation and, you know, being able to make sure there’s a consistency of service from, from that level. And so taking the company from where everyone was handling their own little world to having kind of the next level of managers that then oversaw each department. But I think, you know, you talk to any person who owns a business, making that transition is, is tough. So it’s, it’s, we felt it too.

 

04:48:04

And what are you doing to be able to set your units apart? Because you, you put an emphasis on keeping that, you know, that similar experience, you know, your brand throughout all of your units and making it be the same, even as you’ve been able to, even as you’ve been scaling your team and scaling your units, what, what are you doing to be able to set your units apart from all the other people that are offering furnished accommodations?

 

04:48:28

I mean, I think the exclusivity of our units where you can’t, you know, it’s a double edged sword where, you know, most corporate housing providers will have, you know, for example, 2,400 M is a big apartment building in, in DC and corporate housing provider in Texas, California, and Seattle will list a unit there on their website because that building has a bunch of month to month Rental Rental in it. And so, you know, and then the furniture packages are different, but really, you know, we have kind of one of a kind properties. And if that’s what clients want, then we’re a good fit for them. If we have clients who want dorm and buildings and lots of services because of our model, our units, like those are condo buildings and those condo buildings have six months minimums. So we have them, but they have to commit for six months. And so other, otherwise we usually just, we don’t get those, those business. So, I mean, it’s, you know, we, we try to target business around what we specialize in, which are good locations, unique properties, and, you know, reliable and consistent service. And you have those you’ll you’ll have pretty business.

 

04:49:58

And you, you said that your clients will say like your clients will have maybe situations where they need a six month Rental. Does that mean that you’re gonna go out and find a Rental that can accommodate six months? Because you said that there’s like specific locations where that’s the minimum. Are you growing your portfolio as your clients needs grow?

 

05:50:20

Yeah. I mean, we’re adjusting. I mean, it’s, I will tell you it’s been good. It’s been harder. The trend the last couple years have been for businesses, even though they say I’m gonna be here 6, 9, 12 months. My company’s only letting me sign on for three months. And so as that has become more of a standard, we’ve lost some of our six months minimum buildings, just because they’re, they’re not able to rent as well. So, you know, I mean, there’s nothing we can do about that because those are the, the bylaws, but, you know, we, we kind of try to adjust to market trends. I mean, the other big trend is just, you know, I mean, people like new people, like really nice places and, you know, for us to talk to a property owner who had a, we’ve had a property for eight years or more, it needs a refresh. And sometimes those are hard conversations to have with them because they’re like, what do you mean it’s rented so well, why, you know, is the market not good anymore? And you’re like, the market’s good, your property needs, you know, an update. And, you know, so it’s always kind of balancing that paying demand and market trends.

 

05:51:42

How does that impact your, I mean, I’m, if your clients are growing and they’re, they’re asking for more units and you’re trying to scale along with them, what happens when you lose a client? Do you have, is there any experience or any time that you lost maybe a clientele or something happened and you know, maybe it scared you or put you in a situation that you, you didn’t think that you’d be able to come out of?

 

05:52:05

Yeah. I mean, every day is a little bit scary, right? I mean, I, I, I mean, like we lose, I mean, we, we lose property owners cuz they sell or move or we lose businesses because guess what we messed up and I mean, you know, you see these perfect storms about, you know, oh, well the keys should have been there and they weren’t. And then, then the air conditioning doesn’t work and oh, by the way, the oven went out on day number two and you know, I mean, these things do happen and it’s, you know, one side it’s almost comical. It’s, couldn’t what I call perfect. You know, just series of that started with one small mistake, but to recover. I mean, I think we’re good at admitting when we’re at fault and we’re good at, you know, learning from it and thanking people for their negative feedback.

 

05:53:07

Because a lot of times when people are upset, they just kind of go away and never hear from them again and kind of relish, hearing bad things. I mean, there’s a, I’m sure anyone can Google, you know, the phrase like hug your haters and I, you have to take that to heart. I mean, it’s painful to read, but then if you really see what they’re trying to tell you, it’s that, you know, Hey, this didn’t work and they’re giving you an opportunity to fix it. And you know, if you just say, oh, that hurts, but don’t do anything about it then really it’s on you. But the gift that they’re giving you about an opportunity to make it better gives you an opportunity to act on it and, and fix it.

 

05:53:53

Well, how do you see the, this, this master lease model? Is this something that you see other corporate housing companies using effectively? Is this something that you could even consider doing yourself because you know, you have two expectations, you have the expectation that you’re trying to please for your, your, you know, the demand, your, your, your businesses, and then you have the expectation that you’re trying to meet for your owners, your, your, your supply. If you use this master lease model. Now it’s really just more on the demand side with your businesses. Is that something that you see as being a workable model in the corporate housing world or something that you could even do yourself?

 

05:54:36

Yeah, I mean, it’s cyclical. I mean, when I remember early on, you know, companies would rent an apartment or a couple apartments and just have their staff rotate in and out. And because that was still cheaper than a hotel. And then as people got more efficient, they realized, oh, I, I don’t wanna just do that. I’ll I’ll rent it only as needed. And so then corporate housing companies would, you know, become the economies of scale where they would rent out of block of apartments, you know, commit two or three or five year term and, you know, rent the furniture and, you know, figure out the furniture side. And, you know, if they planned it well could make some money. And then the other, you know, then the trend became with technology and efficiencies. It’s, it’s more of, you know, some companies, I, I feel the bigger trend is basically on demand.

 

05:55:45

It’s like, Hey, I need a place for four and a half months in this part of town, this price point. And then they go out and find it, but they only sign on their risk is, you know, tied to their client, you know, and after four and half months, their, their lease ends two days after their client moves out. And, you know, and so, you know, it’s when I see master leases popping up again, it’s like, yeah, I mean, it works. And it’s, it’s one way, I don’t know if it’ll ever go away. And I, I also, you know, you just see these things pop up again and again, and you, at the end of the day, it’s like you, what, what makes the most sense? How is the, or how is my business ed adapt with their, of my clients?

 

05:56:41

Do you have any, any opinions or thoughts on the, on the short term rental model and specifically like that master release? We we’ve, you know, during this time the short term rental world has really been impacted, you know, vacancies, you know, you know, no vacancies at all, or are, you know, they’re, they’re completely vacant. And these people that are using this master lease model at scale, you know, specifically a couple companies, like, like, let’s say Saunder or lyric, where they rent out full apartment buildings and they’re leasing them, and now they’re struggling with their vacancy. Do you have any thoughts or opinions on, on that right now everybody’s at, you know, something like your, what you’re doing, and you’re saying you only have a decrease in occupancy, is you right?

 

05:57:38

And by the way, I wanna let you know, every day is a new discovery where, you know, Hey, we’re doing great. And then, and say not been great. And it’s again, out in time is, is, is accurate. But, you know, we, we thought April was looking good and now April, you know, every day we get, you know, other updates. So it’s not a, a waterfall of massive cancellations, but it’s, you know, it goes up and down and I mean, we’ve been signing a couple people too, so it hasn’t been just all down, but I just wanted to bring that up. That it’s not all that bad. So your question, sorry, I got my tangent again,

 

05:58:33

Are your thoughts with these companies like, yeah. You, you know, like WeWork, WeWork, they, they went under, these companies are dropping everything all, sorry, sorry for those that are listening for the, for the audio change, but Tim Tim’s battery was dying. So we, we had to improvise, but we’re working.

 

05:58:52

Yeah. I apologize for that. I, I thought I had a full battery, but also the joys of working from home don’t have my full equipment with me. So to answer your question, my thought on that model, given a pandemic, which, you know, hasn’t happened for more than a hundred years now, you know, really doesn’t fall on any business plans, you know, so it’s a shock to everyone and it’s gonna leave a lot of people holding the bag because you know what it, you know, who should pay for this pandemic, meaning, you know, should the renters suffer, should the landlord suffer, should the companies that are guaranted the rent suffer. And I don’t think there’s an easy answer to that. I mean, I know there’s a lot of talk about rent, forgiveness and help, but I also don’t think that I don’t think that it means everyone should get a, a free handout or survive and who a small business, if can I always said, if can build a better mouse and my company becomes irrelevant, you know, hand to shame on not being nimble. I, I know it’s, you know, I I’d like to think that if the whole industry goes away, I’d find something else to do, but maybe work on my Jumpshot. I,

 

06:00:30

And what would you do differently if you had to start from scratch?

 

06:00:34

I would tell you I’m, I’m completely bipolar on technology, where we decided to go down and build a custom website and do PHP in programming. And it’s the best thing in the world. And it’s the worst thing in the world. The technology side, I’m always afraid of getting stuck into a platform that becomes irrelevant. And so I’ve spent, I lost a lot of money investing in technology that delayed rollout in technology is the right path and trying solution on technology rather. And the bear.

 

06:01:35

And if you could give one piece of advice to someone who’s trying to start a corporate housing company or trying to establish those corporate client relationships, what, what would you tell them?

 

06:01:48

Gosh, I probably say patience. I mean, like I said, it’s a niche. It’s not, you know, if you have a good property and a good part of town and you do nightly Rental, you’re rented the majority of the time. If it’s allowed and you know, everyone good at it. You know, when you, if you choose to go furnished monthly, you’re gonna be pulling from a smaller pool of potential renters. The rates won’t be as high, the occupancy should be higher. And it’s, you know, it’s, it’s kind of a, it’s a good path to go down, but it’s not gonna be high flying, like, you know, the Vacation rentals or the urban, you know, hotel, alternative Rental, just a smaller group. So, you know, and learn from your mistakes. Use that as my other piece like you don’t reviews and brush it off, but, you know, act on them.

 

06:02:58

Do you think that short-term rentals and, you know, corporate rentals that there’s a, a blend between the two that there’s a world where they can both work together? Or do you think that it’s two separate niches and they both kind of have to stay within their lanes if they really want to be able to, you know, run a profitable business?

 

06:03:16

Yeah. I mean, I think being flexible, I mean, I think they’re similar enough that you could make them work, but my advice usually is to choose one or the other and make that a primary because I mean, I’ve worked with developers and we’ve toyed with ideas of, you know, having a building where, you know, based on the size and, and features sub units would be UN year long would and would, monthly. be would some and And I mean, I, to me that makes a lot of sense cause its it’s neighborhood, its size features, you know, each, each one has different needs from size to, you know, sunlight access, you know, which, which do the clients want. And then the hard part on that then is, you know, marketing, it’s like describe a building, you’re targeting all different three clientele. But back to original question, I just choose in stay to is our in our little world of 30-day rentals and you know,

 

06:04:37

And, and last question, where, where do you see corporate housing going in the future? Do you see a change? I mean, you’ve been there since the beginning, you know, nearly 20 years now and you’ve seen, you know, the internet Craigslist, all these different things. Where do you see corporate housing going? Moving forward?

 

06:04:54

It’s always gonna be there. I it’s, there’s always need that’s hotel space term longer for is stays stays projects, relocations. It’s always exciting to go to the annual conference, the chip corporate housing prior association, and just kinda see where technology and ideas and you know, how that impacts and makes. But I mean it’s, if it’s not going away, it’s, it’ll, it’ll always be there and it’s, it’s a, it’s a nice little niche.

 

06:05:40

Awesome. Well thank, thank you so much, Tim, for, for taking the time to, you know, to come on here, share, share your wealth and knowledge and experience. If anybody wanted to be able to reach out, find out more about, you know, corporate housing or what you do specifically being in the DC area, what’s the best way that they can reach you.

 

06:05:58

I’m pretty good on email. Tim stay com website can found on I’ve I’ve written a couple articles on LinkedIn sharing my ideas on couple of these things. So yeah, happy to, like I said, I can talk this stuff all day, so happy to help people out and give advice and see what I can do to be better.

 

06:06:25

Awesome. Well, I appreciate thank, thank you, Tim. I’ll include everything in the show notes as well as your contact and stay Anta she thank you so much again, Tim, and until next time, host nation, keep on hosting.

 

06:06:36

Thanks man. Take care.

 

06:06:39

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